Insulin resistance, often associated with obesity, precipitates metabolic syndrome, type 2 diabetes, and finally, atherosclerosis. Sources of excess energy cause abnormal accumulation of tissue lipids leading to cellular dysfunction through cellular stress and inflammation. This process is often referred to as lipotoxicity. Until date, effective approaches that aim to overcome insulin resistance involve amelioration of obesity by caloric restriction and/or exercise. Quantitative control of lipids, especially triglycerides and fatty acids in adipose and other tissues, and plasma can be addressed using these measures. However, altering tissue lipid composition may provide another strategy to prevent or control lipotoxicity. Endogenous fatty acid synthesis plays a crucial role in determining tissue energy states. As a target gene of SREBP-1 that controls lipogenesis we identified a unique enzyme, Elovl6, which is responsible for the final step in endogenous saturated fatty acid synthesis, thereby controlling tissue fatty acid composition. Elovl6-deficient mice become obese and develop hepatosteatosis when fed a high-fat diet or when mated to leptin-deficient ob/ob mice. However, the mice exhibited marked protection from hyperinsulinemia, hyperglycemia, and hyperleptinemia. Hepatic fatty acid composition is a novel determinant of insulin sensitivity independent of cellular energy balance. Inhibiting Elovl6 activity may provide a novel therapeutic approach for treating insulin resistance, diabetes, metabolic syndrome, and cardiovascular risks by circumventing obesity problems. In this review, we consider fatty acid metabolism and lipotoxicity, and discuss the role of Elovl6 in newly recognized aspects of metabolic regulation.